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Signing a Loan Agreement of KD 7,000,000 for financing the Modoghashe- Wajir Road Project in the Republic of Kenya
A Loan Agreement between Kuwait Fund for Arab Economic Development and the Republic of Kenya has been signed today in Nairobi whereby Kuwait Fund extends a Loan in an amount of KD 7 million equivalent to about US$ 23.8 million to participate in the financing of the Modoghashe – Wajir Road Project. It is worth mentioning that in extending its loans and grants, Kuwait Fund depends exclusively on its own resources.
The Loan was made in pursuance of an initiative by His Highness Sheikh Sabah Al-Ahmed Al-Jaber Al-Sabah, the Amir of the State of Kuwait announced at the 3rd Africa-Arab Summit held in Kuwait during the period 19 - 20 November 2013 to grant concessionary loans to African countries to the tune of one (1) Billion US Dollars spread over the succeeding five years for financing development projects in the African countries.
The Loan Agreement was signed on behalf of the Republic of Kenya by His Excellency Henry Rotich - Cabinet Secretary The National Treasury of the Republic of Kenya, and on behalf of Kuwait Fund for Arab Economic Development by Mr. Hamad S. Al-Omar, Deputy Director-General of the Fund in attendance of Mr. Ayad Al-Gharaballi, Regional Manager, Central, East & South African Countries at the Fund.
The proposed Project aims to participate in supporting the economic and social development of North Eastern Region of the Country, reduce operating costs as well as travel time, and raise the efficiency level of transport, and facilitating of movement and transportation of passengers and goods to neighboring countries.
The Project comprises the construction of the Modogashe - Wajir Road to bitumen standard, with a length of about 156 Kilometers, and a width of 7 meters, with a shoulder of 2 meters on each side. It consists of civil engineering services, site preliminary works, earth works, pavement layers, drainage structures and road safety works, and consultancy services for review of project design and for supervision of construction.
Total cost is estimated about Shk13, 664 million, equivalent to about KD 39.041million of which about KD 28.574 million are in foreign currency and representing about 74% of the total cost. The loan, for KD 7.0 million, will cover of about 18% of the total project cost, in addition to the financing of the Saudi Fund for Development (SFD) in an the amount equivalent of about KD 7.353 million, the Arab Bank for Economic Development in Africa (BADEA) in an amount equivalent to about KD 5.882 million, the OPEC Fund for International Development (OFID) in the amount equivalent of about 5.882 million , and Abu Dhabi Fund in the amount equivalent of about KD 4.412 million. while the balance and any cost over-runs that may occur whether in local or foreign currency would be covered by the government of Kenya.
The Loan matures over a period of 25 years including 5 years grace period, and will be amortized in 40 semi-annual installments, the first of which will be due on 1st date on which any interest or other charge on the Loan shall fall due after the elapse of the above-mentioned grace period. The Loan bears an interest rate at 1.5% per annum, in addition to 0.5% per annum to cover administrative costs and other expenses incurred in the implementation of the Loan Agreement.
The signing of this Loan brings to 6 the number of loans accorded by Kuwait Fund to the Republic of Kenya, where the Fund previously provided 5 loans totaling about 24.4 million Kuwaiti Dinars, equivalent to about US$ 82.96 million to participate in the financing in projects in various sectors; In addition to the above, the Fund had extended to the Republic of Kenya one technical assistance in the amount of KD 232,000 (i.e. about US$ 788,800) to finance techno-feasibility studies of Bura Irrigation and Settlement Scheme Rehabilitation, which was consolidated in the same Loan Agreement.